Correlation Between Transcode Therapeutics and Passage Bio

Can any of the company-specific risk be diversified away by investing in both Transcode Therapeutics and Passage Bio at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Transcode Therapeutics and Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Transcode Therapeutics and Passage Bio, you can compare the effects of market volatilities on Transcode Therapeutics and Passage Bio and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Transcode Therapeutics with a short position of Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcode Therapeutics and Passage Bio.

Diversification Opportunities for Transcode Therapeutics and Passage Bio

-0.41

Correlation Coefficient

Transcode Therapeutics  Passage Bio

Very good diversification

The 3 months correlation between Transcode and Passage is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Transcode Therapeutics and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio and Transcode Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Transcode Therapeutics are associated (or correlated) with Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Transcode Therapeutics i.e., Transcode Therapeutics and Passage Bio go up and down completely randomly.

Pair Corralation between Transcode Therapeutics and Passage Bio

Given the investment horizon of 90 days Transcode Therapeutics is expected to generate 0.98 times more return on investment than Passage Bio. However, Transcode Therapeutics is 1.02 times less risky than Passage Bio. It trades about 0.08 of its potential returns per unit of risk. Passage Bio is currently generating about 0.06 per unit of risk. If you would invest  1,138  in Transcode Therapeutics on April 30, 2025 and sell it today you would earn a total of  251.00  from holding Transcode Therapeutics or generate 22.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Transcode Therapeutics  vs.  Passage Bio

Transcode Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transcode Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Transcode Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Passage Bio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Passage Bio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Passage Bio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transcode Therapeutics and Passage Bio

The main advantage of trading using opposite Transcode Therapeutics and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcode Therapeutics position performs unexpectedly, Passage Bio can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Passage Bio will offset losses from the drop in Passage Bio's long position.

The idea behind Transcode Therapeutics and Passage Bio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.